Global Recession Hitting Africa Particularly Hard

Brandon Sun “Small
World” Column, Sunday, April 5 / 09Zack
Gross

When the United Nations
Development Program (UNDP) announced its Millennium Development Goals
(MDGs) campaign in 2000, designed to turn the corner on global poverty,
disease, illiteracy and gender discrimination in fifteen years, it
wasn’t counting on a worldwide recession taking place along the
way!

In the lead-up to this week’s G-20 economic summit,
experts were predicting that Africa would lose $50 billion (10%) in
income due to the downturn, and steady gains made in recent years to
raise up Africa’s economy would be reversed, plunging that
continent further into poverty.

Ethiopian Prime Minister Meles
Zenawi, Chair of the New Partnership for African’s Development (NEPAD),
warned that some African countries “could go under, meaning total chaos
and violence. In the United Kingdom, the fear is unemployment –
in Africa, it is less access to food which could trigger death”.

African
leaders argued that stimulus spending in Africa would have more impact
than similar amounts being invested in the developed world.

The
Liberian President, Ellen Johnson-Sirleaf, Africa’s first elected women
head of state, added that it would be cheaper now to support economic
development in Africa than later to pay for peacekeeping when conflict
breaks out.

The economic crisis has hit Africa due to the
falling prices of such commodities as oil, gold, zinc and copper, and
drops in tourism, foreign aid and money being sent home by workers in
wealthier countries. Another concern raised by African leaders
was the recession causing a new wave of Africans to migrate to
developed countries, causing social tensions in the North and a
brain-drain in the South.

Africa also called for more of
a say in the deliberations of international financial institutions such
as the International Monetary Fund (IMF). Currently, South Africa
is the only country officially part of the G-20.

Oil accounts
for 85% of Nigeria’s economy, as Africa’s largest producer.
However, the price has dropped 65% in recent months from a high of $150
per barrel, causing the local currently, the naira, to drop in value by
one-third. This drives prices on consumer goods up in an economy
where already 70% of people live on less than $2 per day.
Inflation is now over 10% and many prices have risen 20%. Where oil
exports once balanced all imports, now imports far outweigh exports in
value.

African nations say that the global recession is not in
any way their fault, but caused by bursting housing bubbles and bank
liquidity crunches in the largest economic powers. Finance
ministers and central bankers at the G-20, which represents 80% of the
world economy, agree that the need is urgent and the obligation present
to respond to Africa’s need.

British Prime Minister
Gordon Brown, long a champion of African development, has said: “We
have got to build a new consensus on economic development. Doing
nothing is no longer an option. The Washington consensus on
economic policy is over…the old world has gone.”

UN
Secretary-General Ban Ki-moon has also spoken out on “the challenges
facing the most vulnerable poor countries”. Ban has pledged to be
a strong advocate for the African cause, fearing that economic losses
will plunge politically fragile areas of the continent back into
conflict.

Losses in development assistance would be
devastating after recent economic and political gains, such as shared
power in Zimbabwe’s government and the first functioning government in
many years in Somalia. Said Ban: “Africa needs good roads,
schools and hospitals; reliable and efficient water services,
electricity grids and telecom networks, and regional approaches to
shared resource belts and infrastructure.”

As the G-20 prepared
to meet, figures were released showing that overseas aid has hit record
amounts despite the worsening financial outlook. About $120
billion were given in development assistance by the world’s richest
nations in 2008, a 10% increase from the year before. The
Organization for Economic Co-operation & Development (OECD) said
that rich nations were on target, based on the Gleneagles Agreement of
2005, to give 0.56% of GDP in aid by 2010 and 0.7% by 2015.
However, aid NGOs responded that while Britain, Germany and the Nordic
countries had increased their aid giving admirably, many other
countries were lagging behind their promises. Britain’s current
figure is 0.48%, while Canada stands at 0.32%.

It will
be interesting to see, amidst the hoopla of visits to the Queen and the
media feeding on the window-smashing of London banks, whether the G-20
will come up with a unified plan to deal with our global financial
crisis, and whether that plan will respond to the concerns of the most
vulnerable of our world. If altruism and justice are not mixed in
with self-interest, Africa may be condemned to fall back into greater
poverty and conflict, exacting a shameful toll in human lives.